*Indonesia Banks: Buy Big-3 SOE Banks on Weakness. BBRI Top Pick, Followed by BMRI & BBNI* (Henry Wibowo, Alvin Baramuli- RHB Research) Report Link: https://research.rhbtradesmart.com/attachments/11/rhb-report-ind-banks_sector-update_20190531_rhb-48920589319986905cf07717968af.pdf *OVERWEIGHT; BUY BBRI, BMRI and BBNI*. MTD, SOE Big-3 Banks’ share prices are down by up to 15% amidst foreign fund outflow (political uncertainty), asset quality concerns (Krakatau Steel restructuring), and MSCI rebalancing. Also, 4M19 banks-only results indicated diverging earnings growth: BBRI (+15%), BMRI (+17%), BBNI (-5%). BBRI/BMRI’s provisions fell 20%/30%, while BBNI’s grew 44%. New BUYs pecking order: BBRI (still Top Pick), BMRI is now in second place (reduced M&A overhang), and BBNI is third (likely higher provisions in 2Q19). *Concerns on Krakatau Steel (80%-owned by Government) restructuring overdone*. Krakatau Steel (KRAS IJ, NR) is reportedly undergoing another round...
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